Bell Atlantic takes $1 billion charge 3rd-quarter subtraction prompted by buyouts, Asian investments

Telecommunications

October 15, 1998|By Mark Ribbing | Mark Ribbing,SUN STAFF

Bell Atlantic Corp. is taking a $1.1 billion charge against its third-quarter earnings, mainly to absorb costs related to troubled Asian investments and employee buyouts.

Nearly half of the charge -- approximately $545 million -- comes from write-downs in the value of Bell Atlantic investments in Thailand and Indonesia, two nations that have been particularly hard-hit in the Asian financial crisis.

"As circumstances developed in Asia, we made the judgment that the impact on investments in Asia is going to be of a longer term than we had anticipated," said Bell Atlantic spokesman David Frail. "So we decided that it is appropriate for us to reduce the value of those investments on our books."

Another $500 million of the charge is due to the completion of an early-retirement program that began in 1994.

New York-based Bell Atlantic, which dominates local telephone service from Maine to Virginia, said that of the 13,800 employees eligible for the buyout, about 5,200 have accepted the offer.

The workers who accepted the buyout will leave Bell Atlantic over the next 14 months. The company said it expects that fewer than half of them will be replaced.

Mel Marten, an analyst at Edward D. Jones & Co. in St. Louis, said the array of charges "doesn't significantly affect my view of Bell Atlantic's business."

Marten said the employee buyout will help Bell Atlantic over the long term. "They're cutting employee expenses more than they had expected to," he said.

None of Bell Atlantic's Maryland workers were eligible for the program, since it covered only employees of Nynex Corp., the New York and New England phone company that completed its merger with Bell Atlantic last year.

The remaining $55 million of the charge is made up of costs relating to the Bell Atlantic-Nynex merger and to write-offs on equipment that has been rendered superfluous by the company's new digital-video ventures.

Bell Atlantic has since announced another big merger, saying on July 28 that it plans to join forces with national phone giant GTE Corp. Bell Atlantic denied that the charge is intended to clear the financial books in preparation for the planned $52 billion marriage with GTE.

Bell Atlantic will announce its third-quarter earnings Oct. 21. The company released its charges after the market closed on Tuesday, but the announcement caused no major ripples on Wall Street. Bell Atlantic's stock gained 81.25 cents a share yesterday to close at $50.0625.

Pub Date: 10/15/98

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